Global semiconductor shortage - winners and victims through the lens of dividends

• We discuss the dividend dynamics of the winners—80 key companies in the semiconductor supply chain—and victims of the global semiconductor shortage.
• Dividend from winners is expected to amount to US$66.1 billion this year, up 14% year on year (y/y) excluding Samsung Electronics. Asia Pacific accounts for more than half of the aggregate payout followed by 40% from the United States and 10% from the European Union.
• Among companies likely to hike dividends (up more than 30%), Taiwanese names stand out owing to the competitive edge gained over the years. US companies are rarely found in the top dividend growth list owing to their preference for progressive over a volatile dividend stream.
• Players with significant revenue exposure to automobile semiconductors will show notable dividend growth; capex spending along with mergers and acquisitions (M&A)outlays will compromise some companies' dividend upside potential.
• We analyzed 114 sub-sectors and concluded that the dividends outlook of chip shortage victims is relatively safe from the crisis. Automobile and consumer electronics flagged warning signs on production, but dividend payout will be guarded by a generally optimistic earnings outlook.
• Semiconductor nationalism—large-scale government investment—acts as a double-edged sword to semiconductor players. With companies struggling to find a balance between commercial commitments and political alignment in the crossfire of the US-China trade war, we see heightened uncertainty in the near future.

* All data in the report are as of July 12, 2021

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Posted 03 August 2021 by Stella Lim, APAC Dividend Research Lead, Equity Data & Analytics, IHS Markit